Could Blockchain-Based Fractions of Digitized Stocks Revolutionize Markets? (venturebeat.com) 90
An anonymous reader quotes VentureBeat:
Despite being championed as a decentralized form of money that puts individuals firmly in control of their own wealth, cryptocurrencies mostly remain the preserve of the super-rich and the super-nerdy. 1,000 Bitcoin wallets currently hold 35.18% of all Bitcoins, for example, and only a select few computer scientists understand the inner workings and machinations of blockchains... Such inconvenient truths undermine the oft-repeated claim that blockchains will democratize wealth, largely by lowering barriers to entry in financial networks and by preventing central banks from devaluing money via inflation. Nonetheless, this prediction has moved one step closer to realization in recent months, with the emergence of tokenized stocks....
In contrast to a new cryptocurrency designed specifically to conform to securities legislation (i.e. a security token), tokenized stocks provide digitized versions of existing shares in established companies, such as Google, Facebook, or Apple... [W]hat's interesting and potentially radical about such digital stocks is that they permit customers to buy fractions of stocks in big companies. This will open up trading to millions of people who wouldn't otherwise be able to afford buying shares in Apple or Amazon...
One significant side effect of tokenized stocks is that they could change the fundamental nature of global stock markets and how they behave, by opening them up to round-the-clock trading... It's interesting to note that some commentators believe the growth of round-the-clock exchanges might, in the long term, result in the emergence of a single global stock market.
The article also notes that it will be cheaper to trade digital versions of stocks, "since person-to-person trades circumvent the need to go through a broker...
"They look set to make the financial world more accessible to millions people, in addition to having serious implications for global markets."
In contrast to a new cryptocurrency designed specifically to conform to securities legislation (i.e. a security token), tokenized stocks provide digitized versions of existing shares in established companies, such as Google, Facebook, or Apple... [W]hat's interesting and potentially radical about such digital stocks is that they permit customers to buy fractions of stocks in big companies. This will open up trading to millions of people who wouldn't otherwise be able to afford buying shares in Apple or Amazon...
One significant side effect of tokenized stocks is that they could change the fundamental nature of global stock markets and how they behave, by opening them up to round-the-clock trading... It's interesting to note that some commentators believe the growth of round-the-clock exchanges might, in the long term, result in the emergence of a single global stock market.
The article also notes that it will be cheaper to trade digital versions of stocks, "since person-to-person trades circumvent the need to go through a broker...
"They look set to make the financial world more accessible to millions people, in addition to having serious implications for global markets."
Short answer: No. (Score:5, Insightful)
Long answer: fuck, no.
Re: (Score:2)
Re: (Score:2)
Short answer: absolutely.
Think of the dumpster fire that would be a global stock exchange that can't close, can't halt trading, and offers always-on instant electronic trading of tiny fractions of a stock for cheap, to anybody.
You think algorithmic trading is bad now.
Re: (Score:2)
Think of the dumpster fire that would be a global stock exchange that can't close, can't halt trading, and offers always-on instant electronic trading of tiny fractions of a stock for cheap, to anybody.
Dark pools [wikipedia.org] already have some of these characteristics.
Most stock transactions do not happen on the public exchanges.
dumb dumb dumb idea (Score:2)
Stock shares are quantized because the company wants them quantized. They are free to change the multiplier with a stock split or join.
But if you have large priced shares you can influence who buys them and sometimes you wnat institutional buyers rather than whimsical day traders. Likewise if they are voting shares you prefer, usually, institutional voters over people who vote randomly.
Re: (Score:2)
The most famous example is Berkshire Hathaway. A single share currently costs $300,000.
Warren Buffett keeps it high to discourage short term investors.
Re: (Score:3)
True until 1996. At that time Berkshire Hathaway issued Class B shares which subsequently split and currently trade for $199 per share. They trade like any other similarly priced shares and have voting rights in Berkshire Hathaway like the original Class A shares but at a smaller ratio (logically).
https://www.investopedia.com/a... [investopedia.com]
Re: dumb dumb dumb idea (Score:1)
At an actually higher ratio- the prices would suggest class b's get 1/1500th of a vote, but they get more like 1/200th
Re: (Score:2)
Now a wallet-hacking crypto thief will be able to make your retirement savings vanish in a fraction of a second.
Re: (Score:2)
LOL, were you in a coma in 2008, or what?
Could they? Absofuckinlutely.
You can always subdivide and repackage the ownership certificates for something like stocks that are a paperwork-based item of value.
If they tricked you into taking their question at face value, they already tricked you and are done. Now they're an "innovator" and you're a "skeptic" and they've created a lot of "interest."
Never ask "could they" on these things. Of course they could. What a person should be asking is, what value is actuall
Block chain tulip petals (Score:5, Insightful)
Re: (Score:2)
*) Some random guy's NAS, which is sure to be "stolen" or "hacked" at some point.
Re: (Score:2)
You might want to re-check your tulip market myth, it is a modern fiction not some sort of economic insight.
People get really confused by the historical writings, because the sort of courtiers who were investing in things like tulips were people who phrased everything as if their own family budget was the only money in the nation, and their own interests the only interests that mattered. So a personal bankruptcy would be described as the death of the nation's economy, etc. If a person's favorite restaurant
1929 (Score:1)
Remember?
Re: (Score:2)
Remember?
No, I don't remember because I wasn't born yet. But I have read about it. The market fell 12% on Oct 29th, 1929. That was a big decline, but there have been bigger single-day declines. The difference is that in 1929, the government responded by raising interest rates, exactly the opposite of what they should have done. This decrease in liquidity froze up financial markets, pushed the dollar into deflation, and bankrupted businesses and farms trying to to service fixed loans in the face of falling price
Resounding no (Score:2)
Re: (Score:2)
This will just make corporations even more obsessed with ever growing profits.
More likely it will have the opposite effect. Management prefers to invest for the long run, and they hate the pressure for ever higher quarterly profits. The pressure for short term profits and divestiture comes from big activist shareholders. Small holders and day traders don't get involved in corporate governance, they don't go to shareholder meetings, and they make it harder for activists to get a quorum for change.
What's the point? (Score:3)
You can buy fractional shares of stock today. This claims to save some broker fees, but that has nothing to do with blockchain and sensible (small) investors don't trade stocks very often anyway.
Recession (Score:1)
After the next recession and tech bubble bursts all of this nonsense will be gone. Until the next one.
Re: (Score:2)
Indeed. The supply of fools with some money they want to desperately and blindly turn into more on the cheap is endless, and they never learn from history.
Fractional Shares are Nothing New (Score:1)
They happen all of the time with dividend reinvestment into an existing position. Controlled inflation is a necessary part of managing a money supply. A big reason why Bitcoin and other crypto tokens suck at actually being money, although certainly not the only one, is due to the fact that they were setup by persons who did not understand the value of centralized banking and why it's a necessary part of money supply stewardship. Instead, they recreated a speculative asset that pays no dividends or coupons a
Blockchain: solving yesterday's problems today (Score:2)
- Track shipments
- Buy fractional shares
- Buy things without cash
But everything on that list is already covered by easier/cheaper methods (that also have smaller carbon footprints). Other than buying drugs/hacking/childporn from a distance...will there ever be anything POSITIVE we can do with this technology or is this stuff basically just digital Esperanto?
Re: (Score:2)
Other than buying drugs/hacking/childporn from a distance...will there ever be anything POSITIVE we can do with this technology
When governments tried to silence Wikileaks by cancelling their paypal/credit cards etc, they were still able to receive funding by using bitcoin.
You may not consider that positive, but I do.
Re: (Score:2, Insightful)
If you think governments can't crack down on cryptocurrencies if they want to, you're dreaming.
If cryptocurrency were a serious threat to traditional currency, the government could simply make transactions involving title transfers and contracts unenforceable.
Re: (Score:2)
Re: (Score:2)
If you think governments can't crack down on cryptocurrencies if they want to, you're dreaming.
That's a strawman: you are attacking something I never claimed.
Re: (Score:3)
I'm just saying that the Wikileaks thing doesn't prove anything about cryptocurrency. Apparently you agree.
Re: (Score:2)
If you were trying to counter either of those points, you did not.
Re: (Score:2)
I agree, they can't *narrowly target* sanctions. But if that's a problem, they can put in blanket provisions that will sufficiently limit cryptocurrency's usefulness across the board.
Re: (Score:2)
We can look at real-world parallels, too. For example, Venezuela and Argentina both tried
Re: (Score:2)
Hash chains are extremely useful, and are used all over the place. Git, for example. Their main feature is fast integrity checking.
"Blockchain" is a hash chain with a bunch of "gubmint bad" philosophy attached to it, and resulting technological shenanigans to avoid setting up a central authority. Unsurprisingly, so far that has proven useful in the domains you describe.
Digital blockchain AI synergistic paradigm? (Score:3)
Buzzword bingo it is!
Trading? (Score:1)
Yeah, it Might Happen, and Monkey's Might Fly... (Score:2)
Here's [youtube.com] a good response...
At least a couple easy to see problems: (Score:2)
1 - Stocks go from being owned based on a ledger to being "barer". If you own the stock on the block chain, you own the stock. This means that if someone hacks your computer he can own your stocks. Much easier than trying to get ownership of your stocks via Vanguard or Fidelity, even if they get your password to those accounts.
1a - If someone owns the ledger, they can own all your stocks. I'll trust Vanguard or Fidelity. Thankyouverymuch.
2 - Trading stocks currently has a cost and a tax implication. C
Re: (Score:2)
Re: (Score:2)
I suspect that the next bubble will bust the myth that you can't lose via this strategy (e.g. ``you can't lose by investing in real estate'').
I never said "you can't lose". I said you're much better served:
1 - The average fund manager does ... average.
2 - The average client of the average fund manager does average - the expense ratio.
3 - Therefore the average client of the average fund manager does less than average.
You're better served by putting the money in a total market index fund with a (very) low expense ratio and get ... an average return.
If the market goes down, you will lose money. Anyone that promises you otherwise should be avoided.
LOL (Score:1)
The original bit coin is failing badly because the processing cost of a small transaction is larger than the value of the transaction. Attempting to apply block-chain based fractions to micro-stock trading is going to face the same barrier.
The authors need to do some serious studying and get out of LOL land.
The blockchain is pretty much done (Score:2)
... at the moment. Fraud abounds, insecurity is rampart, major problems are unsolved. This half-baked idea would never have gotten big, were it not for the widespread greed and stupidity in the human race. For the moment, the idea has failed. It may get a revival when major problems have been solved, but that will take some time.
And unlimited, direct stock-trading? Are you serious? There is a reason major stocks are only traded at exchanges. Also, small-time investors are basically the victims that provide
A new gambling market (Score:4, Interesting)
It used to be that stocks paid dividends to shareholders. This rate was above and beyond interest on bank deposits, who loaned the money. There was extra risk, but there was also extra reward.
Fast forward to today and stocks are essentially a fun and lucrative gambling market for those so inclined. Money is made from trading and arbitrage, not dividends. The difference between a Google Class C stock share (non-voting, non-dividend-paying) and a unit of cryptocurrency is minimal, other than the class C has some favorable tax treatment. Dividends as a portion of share price is similar to bank deposit interest rates - tiny, with no risk premium, in chance that dividends are even paid.
This creates another market gamblers can play in. It will be dominated by the inside players with dedicated computing setups, and superior information and intelligence, like the existing financial markets. I don't know that it creates anything of value. It's a new gambling game. Central bank prints money, injects it into Wall Street, and it'll wind up here, and in other financial markets. Direct participants become richer, people with 401K's feel richer. I don't know that it will improve health care, education, housing, improve the standard of living of non-participants, or otherwise spark technological improvement.
Re: (Score:1)
It used to be that stocks paid dividends to shareholders.
They do. Even some tech stocks do (though not much). Coca Cola pays a forward divided of around 3.5%. Centurylink pays a whopping dividend of around 8%. Apple pays a paltry 1.5%, along with Microsoft at 1.6%. IBM pays 4.6%. Proctor and Gamble pays 2.9%
There's nothing particularly all that earth shattering that's changed. Some stocks are "growth stocks" that don't pay dividends. Many more established companies often pay good dividends, and als
Re: (Score:1)
Yes. +1. Although it should be noted you can still buy some of those original stocks. Chevron dividends are like car payments. Every year or so they are paying you a car. Nice cars too. All because of those old timey value stocks. (The only ones Buffet buys, if you believe his investing strat.)
Re: (Score:2)
Do feel free to point out where, specifically, I'm wrong.
Re: (Score:2)
1) Here's a list of top dividend paying stocks, from Kiplinger's. [kiplinger.com]
2) Here's a list of Treasury note and bill yields, from Treasury Direct. [treasurydirect.gov]
You can see the differentials in returns. I guess 1 and 2 percent returns on stocks is superseded by the expected appreciation.
If you started buying stocks in 1987, "dollar cost averaging" with your income, you would be in a very good position today. My point is that the game has changed. The financial media used to whisper/joke about the "Greenspan Put" [investopedia.com]. More recently on
Re: (Score:2)
And just two more points:
1) Interest rates have been trending downwards for 40 years [stlouisfed.org]. This helps politicians as it boosts financial markets. See Trump, who is louder than his predecessors was publicly bashing Powell, his Federal Reserve chair, for running off the balance sheet (the "50 B's" [google.com]) and raising interest rates. Others have done this exactly same thing behind closed doors [marketwatch.com].
2) You can also see 30 year mortgage rates have been declining for forty years too. [stlouisfed.org]
Without a cashless society, or a "narrow ban [bloomberg.com]
solution finally to a problem hitched (Score:2)
Linearity is good, and shares traded (effectively) as a real instead of an integer would probably be a good thing.
But who votes the share?
If a blockchain aftermarket is not endorsed by the corporation, then the shares get voted in the same old way: as integers.
If the share (or share block) is voted by majority within the share, that just makes things less linear than they were before. (Now a person with the Levi stake—0.501—is essentially exercising a voting power that is twice his or her econom
Re: (Score:2)
You can count 0.501 of a vote just as easily as you can count 0.501 of a share. That's not really the problem.
The biggest problem is lack of accountability. I mean that's an intentional feature of most (all?) crypto currencies.. if accountability isn't added into crypto stocks then how do you even know who to get a vote from, or how many votes they should have? Even with integer stocks that is a problem.
Second but related, what happens if a hacker manages to steal (or even just destroy) a large fraction
mutual fund (Score:3, Interesting)
No. (Score:2)